MONEY TALKS: A TOP CONSUMER LENDING FUTURIST SPEAKS ON THE FUTURE OF FINANCE

Take it from a consumer lending futurist and keynote speaker: The world of finance has always been a hotbed for innovation, but the last few years have brought a wave of transformation unprecedented in its velocity and impact, especially in the sector. Two major forces driving this shift are fintechs and big techs leveraging a host of new cutting-edge advancements – among the subjects we often give workshops and seminars on. In any event, as a consumer lending futurist, I thought I might offer a quick overview of some of what’s happening in the field.

Case in point: Let’s think about how alternative data is revolutionizing credit decisioning. Traditional credit scoring models have been unable to provide financial inclusivity for unbanked or underbanked consumers. To address this, lenders are now tapping into alternative data such as rental payments, utility bills, digital footprints, and even social media activities. Like consumer lending futurists note, these unconventional data points are mined to assess creditworthiness, enabling lenders to extend credit to individuals who were previously “invisible” in traditional credit assessments.

What’s more, as you may have seen, automation and machine learning are significantly enhancing the lending process. For instance, machine learning algorithms can analyze vast amounts of data rapidly, accurately assessing risk and determining credit eligibility. Automation also speeds up the loan approval and disbursal process. It eliminates paperwork, reduces the need for human intervention, and accelerates decision-making, thereby improving customer experiences.

Next, peer-to-peer (P2P) lending has been gaining traction as an innovative alternative to traditional lending. Such new types of lending platforms connect borrowers directly with investors, bypassing the need for a traditional financial intermediary. These services are especially popular amongst millennials, who appreciate the convenience, transparency, and often lower interest rates offered.

We also keep hearing about how blockchain technology, while still in the relatively early stages of adoption, is poised to potentially disrupt consumer lending. With its decentralized, secure, and transparent nature, this technology can drastically reduce the risk of fraud, improve loan securitization, and streamline processes like identity verification and contract enforcement. Some forward-thinking companies are already piloting blockchain-based lending solutions, promising a more secure and efficient lending ecosystem.

Buy now, pay later (BNPL) services are also seeing a surge in popularity. This practice allows consumers to purchase goods and services immediately and pay over time, typically without interest if paid within a specified period. Fintechs are leading the charge in this space, transforming it into a multi-billion-dollar industry.

And then, finally, we’d also point out how lenders are increasingly integrating their services into consumers’ daily lives through “embedded finance.” This trend allows non-financial businesses to incorporate financial services like loans directly into their platforms. Customers can seamlessly access lending products while shopping online, booking travel, or using a ride-sharing app, increasing convenience and boosting customer engagement.